Britain not laughing at comedian's tax "scam"

Britain's Prime Minister David Cameron delivers a speech during a dinner with Mexico's President Felipe Calderon at Chapultepec Castle in Mexico City June 20, 2012. REUTERS/Bernardo Montoya

LONDON (Reuters) - Trailing in the polls and under fire over painful austerity measures, British Prime Minister David Cameron has struck a populist tone with an attack on rich celebrities who aggressively avoid paying tax.

The Conservative leader, often derided as a wealthy figure adrift from the economic hardship faced by many Britons, weighed into a row over the tax affairs of a top comedian, branding his tax avoidance “morally wrong”.

With Britain in recession, Cameron’s move may play well with voters hit by higher taxes and public spending cuts, but it drew charges of hypocrisy from opposition Labour Party members and could expose the Conservatives’ finances to greater scrutiny.

The Conservatives’ former deputy chairman Lord Ashcroft was embroiled in a long-running row about his tax status and the government has been accused of overseeing a system that has been soft on big companies’ tax bills.

Cameron angered the French government this week by promising to “roll out the red carpet” for French companies if President Francois Hollande raises taxes for the rich.

Asked about a legal offshore tax scheme that allowed comic Jimmy Carr and hundreds of others to slash their income tax as low as a reported one percent, Cameron said: “It is not fair on hard-working people who do the right thing and pay their taxes to see these sort of scams taking place.”

The Conservatives trail Labour by 14 points, according to a poll on Sunday, after an unpopular March budget that cut income tax for the richest and raised rates for the elderly.

“TERRIBLE ERROR”

Promising tougher action to close tax loopholes, Treasury minister David Gauke said wealthy taxpayers such as Carr should consider their moral stance as well as legal necessities.

“It is the type of contrived, artificial arrangement that is frankly pushing it a bit when you think that most people are paying tax ... at 32 percent or 42 percent,” he told Sky News.

Carr has poked fun at banks’ tax avoidance in TV shows and tours that have earned him millions. He was among the many comedians who criticized politicians for claiming public money to pay for things such as dog food, moat cleaning and a duck house, in a scandal that dominated news headlines for most of 2009.

“I’ve made a terrible error of judgment. I‘m no longer involved in it and will in future conduct my financial affairs much more responsibly,” said Carr, who performed at Queen Elizabeth’s Diamond Jubilee celebration this month.

Labour said Cameron’s spending cuts would fuel tax avoidance because public officials will be too stretched to keep ahead of accountants looking to exploit loopholes.

“For all their tough talk, the government is failing to tackle the problem,” said Labour Treasury spokesman Catherine McKinnell.

The latest group to complain about the public cuts are doctors, who staged their first strike in 40 years on Thursday in protest at being asked to pay more towards their pensions and retire later.

Former Labour deputy leader John Prescott accused the Conservatives of double standards, raising the case of Ashcroft, who avoided paying UK tax on his overseas earnings for years by adopting a special tax status.

He joked on Twitter: “So if you’re a comedian and avoid tax, the Tories condemn you. If you’re a millionaire donor and avoid tax, you get a peerage.”